Wednesday, October 28, 2015

‘A War between Russia’s Regional Elites and Moscow has Begun’

Paul
Goble

Staunton, October 28 – The battle
over Transaero is “only an occasion and indicator of what is taking place: a
war between regional elites and the center,” Andrey Shepilov says. And on is
outcome rather than on what is happening in Ukraine and Syria hinges the
survival of the Russian Federation in its current borders.

The line of this “front,” the
Russian analyst says, runs not through other countries but along the Urals, and
it is becoming ever more threatening given that the Kremlin is running out of
resources and the regional elites have concluded that they must act because for
them it is a “now or never” situation (szona.org/vojna-mezhdu-regionalnymi-elitami-i-tsentrom-nachalas/).

This war which could end with the
disintegration of the Russian Federation isn’t receiving the kind of media
attention that the fighting in Ukraine and Syria has, but, Shepilov argues,
“the resources which are being used in this battle exceed those of Syria and
the Donbas taken together.”

Still more ominous, he suggests, is
that “all the resources have been thrown into battle by the Kremlin and it most
likely doesn’t have any reserves left.”

All this can be seen if one
carefully follows the Transaero case.“The first news [about it] was strange: the government of Russian
suddenly decided that those who owned shares in the private aviation company
Transaero must sell them to the state aviation company Aeroflot for … one
ruble.”

This is totally without precedent or
legal justification: “Even under the autocracy, the tsar couldn’t order his
subject to sell his property for nothing however much he might want to.”

Then, the general director of
Transaero was removed and a representative of Aeroflot appointed, with the
management of the first being subordinate to the management of the latter.
“This might be called a raider seizure but [under those] the raiders formally
imitate the laws governing their actions.”

The next step in this drama came
when the Aeroflot representative now in charge of Transaero didn’t try to save
the company but rather to drive it into bankruptcy, even though Transaero was
meeting all its debt obligations – at least until the change of control. But
then the new managers ordered the company not to pay and thus set the stage for
bankruptcy.

Following that, Transaero began to
cancel flights. Aeroflot agreed to carry the passengers but at a far higher
price that was then charged to Transaero than the original tickets cost. That
only exacerbated the situation at Transaero which then cancelled more flights
for which Aeroflot then received more money.

The Kremlin apparently expected that
everyone involved would simply go along convinced that they had no choice. But
that didn’t happen: Transaero’s employees filed suit and also launched a
petition drive on change.org. In the very first days, that collected “more than
120,000 signatures.”

“And then happened what should have happened.” Those who
held Transaero shares refused to sell them to Aeroflot. That eliminated
whatever cloak of normal order had been cast over this and showed that Moscow
wanted to destroy Transaero and would not be constrained by law or anything
else, Shepilov says.

The
government then declared Transaero bankrupt, something it does not have the
legal power to do: Even in Russia, “only a court” can take that step.And that showed just how far the Kremlin was
prepared to cross a line that it had not crossed earlier as in the case of the
destruction of Yukos where the formalities were observed even if rights were
not.

This
was a clear signal to business and the elites: “’You are nothing … you are our
property to do with as we like. Neither law nor society will defend you. From
now on, only one law will operate in the country: the whims of the first
persons of the state.’” The elites herd and realized that if they did not act
now, they might never have another chance.Others
are pointing to the threats to the territorial integrity of the Russian
Federation that the collapse in oil prices and the ruble and the rapid drawing
down of the reserve fund pose. Konstantin Borovoy among others says that Russia
“will not be preserved in its current borders” (glavpost.com/post/29sep2015/opinion/61579-konstantin-borovoy-rossii-v-ee-nyneshnih-granicah-ne-sohranitsya.html).The reasons for that conclusion are two-fold. On the one
hand, the Kremlin’s retrenchment is hitting the regions furthest from Russia
the hardest, with those east of the Urals and Kaliningrad especially hurt by
Moscow’s actions. (For a map of how the breakup may occur, see hrendyabliki.com/v_rf_prospali_bunt/.)And on the other, regional elites recognize that as the
economic situation worsens, Moscow will only cut back further leaving them at
an ever greater disadvantage. If they don’t act now, as Shepilov says, they may
never again have as many resources as they do at present to defend not only their regions but even
their personal power.